There’s been a ton of liquidations in the past couple of days due to a sharp drop in Bitcoin and other coins. I’m talking about those futures markets where people are basically gambling on crypto prices. It’s all about luck, and honestly, it seems like liquidations happen way too often.
What really got me was when I saw a user on an exchange share a poetic take on the downsides of trading. But the kicker was a screenshot he posted showing a 25x position. Honestly, I think anyone in crypto knows that’s just not gonna work out.
25x leverage is to much.
Anyone that use that amount to opened long position at a price around $119000 or at a higher price for bitcoin would have been liquidated.
I prefer to just go for 5x maximum which is better.
What I am surprised with are people trading with millions of dollars and still using leverage. If I am such people, I will not use leverage at all.
people are greedy that's why they use x25 or even more and most of them do not calculate the fee they are paying for that trade most of exchange has very high fee when u use higher leverage
That person was really brave to use 25x leverage... maybe he hoped that with a long position the price would go up, but instead it went down, resulting in rapid liquidation.
If I were trading millions of dollars, I would choose spot over futures.
But for some reason, many people like to use high amounts of leverage... are they that greedy?
I am not new to trading is the reason I will say the person is not brave at all. There is difference between someone to be brave and to be risking your money in a wrong way. Any trader that is using 25x may first be favored but later the person will lose than he will think of. It is not good to do trading like you are gambling. Using a very high leverage of 25x is highly risky.
Not all though (I will explain). I don't know if you can remember a thread I created in the past when I was asking how come some "position traders" manages to hold their position for more than a week or months and even when price is so volatile, their possitions doesn't get liquidated.
I got some response like, "the traders uses a low leverage that is not up to 25x," That's actually true, some traders also continually top up their balance so that they don't get liquidated while some people don't top up but already have a very large balance such that their liquidation price will be very far.
For example, if I have a balance of $2000 and I took a long position with $1,900 on Bitcoin with 25x leverage when price was $119k, even before price drops to $115k I believe it will liquidate me,
But if you had the same balance as me, and use the same 25x leverage but let say you only entered a long position with $50 and still have a balance of $1, 950, you liquidation price will be very far from mine. So, I believe some people have enough large balance to bear the dip or surge of the market depending on the position they took.
But I strongly agree with you that 25x is way too high and very risky for any kind of trader, some people that sees themselves as pro traders that knows what they are doing are the ones that normally use high leverage.
I am using 100x leverage. That is my default leverage. Instead of using $1000, I used $10 which means $1000 but it is still 1x.
If I want to explain about leverage on this forum to people, I will assume and post about 1x to represents the amount of money the person has on the derivative trading account that he is using to trade. That is how we can understand ourselves here.
Also from what OP posted, you can easily understand that is what he is talking about.
For plebs like us, you're absolutely RIGHT. It's mere luck and gambling. But for the actual traders who actually have the capital and the army of trading bots, it's SKILL.
But plebs have one winning strategy. That's simply to HODL Bitcoin. Its path to a seven digit valuation per coin is preordained.
25x leverage is very high and this like gambling. I don't think more then 5x is good. People want to use futures trading like gambling. They think that the more leverage they use, the faster they can make profits. Thinking like this, they hit the liquidation price with high leverage. Normally, if the price of the coin goes down by 4%, the balance will be liquidated and if it goes up by 4%, there will be 2x profit. Doing this is like gambling. Liquidation can happen at any time here and double or multiple profits can happen at any time. These are nothing but madness.
We may all agree here that 25x is too much leverage to use in futures, but it will not change the fact that there are many traders making profit in futures with that amount of leverage. Some of these traders either have a low account size, and using the leverage like 25X is alright for them, while others really are very confident in their analysis and, based on the psychology level, are able to leverage up to that amount.
Never say never.
In order to tell if this is a lot or a little, you need to know a couple more numbers: how much a position is being opened and how much margin is available. But those who use the entire balance to open an order, which is a violation of risk management, will get liquidated really quickly.
It really depends on your risk tolerance, risk-reward ratio, or risk management. That's not how leverage works.
Some traders use different leverage amounts depending on their entry, target price, and stop loss.
Just think that this leverage control is risk tolerance for every trade you do, and it also depends on what you analyze in the market and the predictions.
Placing leverage will depend on the market situation. If the market is like this for a few days, I will not suggest using more than 10x and using too big money. The risk of getting liquidated will be there and if he is difficult to analyze the market, he should not trade but just watch the market.
This situation is unpredictable although Bitcoin is now moving up. Now, we should feel good because Bitcoin has returned to $114k after dropping to $112k.
Here is one tip that most of trader didn't share.
25x can work, even 100x can work if you only use small margin and have balance remaining to mantain the position loss on cross account futures trading.
When people use 25x or even 100x they trade based on resistance and support, and they just trying to profit from the price bounce. To avoid getting liquidated, they most likely use 2% of their balance and the rest idle just in case the price going the opposite direction, so they can tolerate unrealized PnL loss. They don't open trade and wait for the price to go up or go down, they just taking advantage of the price where there is large trigger order, limit order, and so on that can causes the price to bounce and even if the price bounced a little bit, you're already getting big profit since you have 25x of normal profit. Thats all about it.
In any case outside of that 25x leverage won't work out since market always go up and down. The key is taking advantage of the market based on support and resistance on price action.
I remember JamesWynn when he always posts his position with a x40 leverage. I mean it work for him for a moment, and made huge money, but overtime, he lost, and lost, and lost. Right now, I don't have any updates about him anymore with regards to his positions.
Nevertheless, I agree with what most people here said that x25 is very risky, and for me, isn't recommendable especially if you're just a conservative trader. x5 is the most common that I'm using, and there are also times where I'm using x10 especially when it's Bitcoin but for altcoins, x5 is what I'm using. I've seen traders even using x50, x100 or even x500 (on MEXC), and they're making money from it, but as usual, we don't know if in the long run they really are making money because there's also a chance that they're only posting their only win, but in reality, they lost a lot using that high of a leverage.
Overall, x25 is fine AS LONG AS you know what you're doing. For me, I can't take x25 leverage unless maybe if I'm scalping, but I'm more of a swing trader right now and x5 is what works for me.
Yes, it is true that Bitcoin 72 Hours falls a lot and it is most likely to be Liquid Zero, most of those who were opening the Future Trade. Since Bitcoin's price falls incredibly. But I think Leverage 25x is high and the possibility of being Liquid Zero is closest and the prophecy is not correct. Future trades are a lot like gambling and I think because here is only predicted and the bet is caught, including Leverage. But in this case we should not use too much leverage. This will never lose our profit but will never lose money.
I'm genuinely asking this question, NOT trying to offend anyone.
- Are the people who are posting their insights in the topic about leverage, and "how/when/how large", have a winning track record in trading with a large sample size of more than five years?
Because if you don't, and if you're a mere pleb like many of us in BitcoinTalk, it's probably better not to post from a position of authority, but post from a position of inquisitiveness and learning.
It may work out if you are very lucky, but normally you will lose everything. Normal market fluctuations can wipe you out in an instant.
For that, I think it's better to go to the casino or play the lottery, so you don't have to think.
Brave? Stupid IMO.
Almost no one has a winning track record in trading for more than 5 years. If you use 25x leverage, the percentage is 0% in much less time.
and not just in the last 24 or 48 hours but ever since leverage was created for
Bitcoin traders.
Using high leverage trades is very risky. The higher the percentage means that
the smallest market move affects the position, which is great if the market is rising
but detrimental when the the market falls.
In my experience its extremely difficult to take your profit when the market rises,
the thinking would be that the market will continue to rise and I will miss out on
potential profits - but the market doesnt continue to rise!
It depends on how you use x25 position. Imagine that I have $1000 in my pocket. If I open x25 position with the whole balance, I'll be liquidated if the price goes down or up by 4%, against your opened position. This is a very risky game because the price can easily change by 4% at any time and this can easily liquidate anyone. Btw there is a trick, if your balance is $1000 and you open x25 position with $40, then nothing changes for you because $40 X 25 = $1000 and if the price moves by 10%, you'll gain 10% profit as if it was done with $1000 and x1 leverage. I've impressed my friends with x25 leverage with 1/40 of my capital, so many people do that, consider this.